4th January 9, 2012 P54~72
CHAPTER 4 UTILITY
“Utility is simply a way of describingpreferences.” I think it got the point. The only property of a utilityassignment that is important is how it orders the bundles of goods.
It seems that this book does not emphasizethe difference between cardinal utility(基数效用)and ordinal utility(序数效用).This is important in Gao’s book (高鸿业微观经济学) But the monotonic transformation(单调变换) is an intersecting thing inthe practice. We’ll mention it later on.
You must know how to draw indifference curves from a utility function. However, do you know how to constructa utility function from indifferencecurves?
---> One easy way is to draw the diagonal line illustrated and label each indifference curve with its distance from the origin measured along the line.
I think this is a very novel approach~~~~
It also gives some examples of utility functionssuch as Perfect Complements, Quasilinear Preferences and Cobb-DouglasPreferences.P59
Solving for the slope of the indifference curve we have:
However, it gets very tedious to keep trackof that pesky minus sign, so economists often refer to the MRS by its absolutevalue !
In the end , it give an example of application:Utility for Commuting. It very easybut useful.
For more Mathematical derivation, you canread the APPENDIX for this chapter. P70
It gives me a new way to solve the problemof Cobb-Douglas Preferences ! I think the key idea of this approach is the monotonictransformation(单调变换). Afterwe use the transformation that f[·]=ln(), the function will be more easy to deal with!!!
(现在开始,阅读中会出现比较数学化的推导之类的……阅读速度慢了很多,嗯!打好基础,加油!)